A case study : evaluation of adjudication as a dispute resolution method : NEC and FIDIC contracts

Abstract

Construction development plays an important role in the development of South Africa, not only in respect of its built infrastructure, but also in its broader economic and social development. It also creates employment prospects on a broader scale. Construction contract adjudication has been introduced in South Africa by means of four forms of contracts endorsed by the Construction Industry Development Board. Amusan and Owolabi (2014) mention that the unfavourable outcomes of project objectives in terms of time, cost and quality are as a result of delays in construction projects. Although disputes may be unwanted, having suitable knowledge to manage disputes when they happen often provides better results for the disputants and the project. The study was conducted in an electricity generation organisation, which has various divisions and departments that develop and execute projects. Complex projects that require multiple interdivisional or external stakeholder interfaces are planned, developed and implemented in the Group Capital Division (GCD). The purpose of this research study was to evaluate whether the causes, practices and outcomes of the construction contract adjudication method for the Fédération Internationale des IngénieursConseils (FIDIC) were similar to those of New Engineering Contract (NEC) used for infrastructure construction projects. A mixed method by means of a case study was adopted to answer the research questions. Data were collected from an analysis of 33 study documents related to FIDIC and NEC contract case studies. The results of the study showed the following: 1) There are comparable causes of disputes among the two contracts, even though they vary in terms of ranking on each contract; 2) some of the disputes referred to adjudication could have been avoided; and 3) FIDIC and NEC complied with the adjudication practice, and the outcomes of the adjudications differed based on the merits of each case.